U.S. Treasury Secretary Janet Yellen on Monday said she would not rule out any measures, including potential tariffs, on China’s green energy exports.
“I wouldn’t rule out anything out at this point. We need to keep everything on the table. We want to work with the Chinese to see if we can find a solution,” she said in an interview with CNBC’s Sara Eisen, when asking about the possibility of Washington imposing tariffs if China does not adjust its approach to industry incentives.
“I’m not thinking so much of export restrictions, as some shifts in their macroeconomic policy, and a reduction in the amount of, particularly local government subsidies, to firms,” Yellen said.
She nevertheless stressed the need to create a level playing field in the green technology space.
“We just want to make sure that we’re not driven out of business, and that our firms and workers have opportunities in these industries which will be important ones in our future,” she added.
Yellen is currently in Beijing and is due to leave China on Tuesday. She arrived in Guangzhou on Thursday last week to connect with Chinese officials as fractious economic relations between the two countries continue.
The U.S. has been increasingly voicing concerns about an oversupply of subsidised Chinese clean energy products — such as solar power, electric vehicles and lithium-ion batteries — that it can export to international markets at discounted prices, which the White House says harms the competitiveness of domestic firms. Washington’s anxiety is shared by U.S. allies including Japan and Europe, as a glut of cheap Chinese products, such as solar panels, have flooded their markets.
“It’s fine for China’s firms to export in this industry, to develop it. But some of the techniques that they use — subsidizing their firms very heavily and then supporting them even when they’re losing money … this is something that’s unacceptable from the U.S. point of view, and many of our allies feel the same way,” Yellen said.
The Treasury secretary said that other countries may also explore the possibility of imposing trade restrictions on China. The European Union is currently conducting an investigation into the possible “dumping” of subsidized Chinese electric vehicles into the region, which risks undermining its sizable automotive industry.
The bloc has so far been resistant to implement such measures given its strong trade ties with the world’s second-largest economy. Speaking Monday ahead of a three-day trip to China, German Chancellor Olaf Scholz said he was skeptical about the need for tariffs on Chinese EVs, a spokesperson said, according to Reuters.
Chinese-built EVs are currently subject to sizable 27.5% tariffs in the U.S. — a policy imposed by former president Donald Trump over concerns around unfair trade practices by Beijing.
Yellen said that the Biden administration was conducting a review of the Section 301 tariffs, while China has called for them to be curtailed.
″[China] have said for a long time that they would like to see them reduced,” Yellen said.